Govt should give a leg up to pvt sector

KATHMANDU, JUN 01 -

The dissolution of the Constituent Assembly (CA) has disappointed the country’s private sector. Worried that the demise of the CA may threaten business environment, the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has asked the government to come up with a common minimum economic agenda to shield the economy from the negative impact of the political crisis. The Kathmandu Post talked with FNCCI President Suraj Vaidya on contemporary issues of business and economy.

How do you see post-CA dissolution scenario? How disappointed is the private sector?

It is unfortunate as a Nepali citizen as well as business community leader that four years have lapsed and there is no constitution. It is a huge disappointment. A huge sum of money—close to Rs 30 billion—has been spent in the last four years. The amount would have produced 200 MW of electricity or completed the Melamchi Drinking Water Project which the country so desperately needs at the moment. The politicians should be blamed for the waste of time and money. That’s the frustration I have as the business leader.

The initial reaction from the private sector has been that they have been deceived by the political leadership. How worried is the private sector?

I think there are definitely concerns. When uncertainty happens there is confusion which private sector does not like. But, having said that Nepal has come very long way compared to 15 years back. I think we need to re-look thing in perspectives and we need to look at event in perspectives. Two years ago, we gave the deadline to make the constitution. Crisis was similar. But if you look at the last two years - investment has increased and tourism has increased. In spite of the fact that there has been no constitution and there been no stable government. The fact is that economy can prosper even without constitution as long as the law of the land which are - industrial law, the energy law, the tourism law among others. Hence, the current scenario is a set back and gives wrong perception about Nepal but the country is still a very attractive destination for investment. Our biggest problem right now is we have not been able to identify the projects. Nepal Investment Year 2012-13 has been declared and probably we need to go back and start working on that and let the politician work on their issue. But we from the business need to go on because we have no choice but to look at economy at the forefront to develop and make new Nepal.

But when there are questions about the legitimacy of the current government and election announced by it, don’t you think that foreign investors think twice before coming to Nepal?

I don’t think they will think twice. I think business people are very realistic people. They are not emotional people. Hydropower sector has still tremendous potential and it has good returns for the investors from any part of the world - may they be Nepali or foreign investors. It there is a viability of good cash flow and return - these are not major issues. If you look Italy or Japan, many governments and prime ministers have changed. But as long as the law of the land and business environment is good, people will still invest in Nepal. So, I think - yes there is a slight setback but I don’t think FDIs will drop. I just returned from United States where we lobbied very strongly for the investment in energy sector. We found tremendous interest from the US companies to come to Nepal and look at Nepal’s potential hydropower producing nation. This is a temporary setback but not a major setback.

Private sector has asked government to come up with common minimum economic agenda. Will that be guideline for the private sectors?

I think what was decided by the past government on having 50 projects for Nepal Investment Year. We will request all the political parties to accept that as bringing back hope in this country that economy will prosper. We have about 1000 Nepali people leaving country everyday and therefore it is the responsibility of political leadership to make sure that, in spite of the political differences, the economic sector will not have problems that may reflect from the political side. So, we want all the political parties to come and agree on this common minimum agenda. They need to understand that they are responsible to make sure that Nepal develops because they are giving hope of new Nepal which is prosperous. If it is a prosperous Nepal, than economic agenda should be a common agenda.

Don’t you think, with parliament not in place, there are fears that corruption will increase which would result in increased cost of doing business?

I don’t see corruption coming up in absence of constitution and parliament. Corruption is something that business community is not for because it is cost of business. Therefore, we were always been against it. This government being a caretaker government cannot make major decisions and I don’t see the corruption will be major issue. But, what I do see is that if the opposition for the present caretaker government increases, then I can see bigger problem.  Hence, we need to have a national government. If there is national government, there will be check and balances within that system itself.

With CA election already been announced, many in private sector are worried about the donation drive of political parties. The FNCCI has talked about setting limit for the donation money. How strong is that fear and how important is to set the limit of donation?

I think the fear is there. The past precedents show corruption starts with the election where compromises are made. Therefore, it is for the interest of the country that the businesses should not be supporting political groups. However, we understand the cost of politics. Hence, the government needs to announce a sum for donation that can also be tax deductible. Any individual or a company should not be allowed to give more than Rs 25,000 to any political party. If it is enforced now, in long run it will help the country to eradicate corruption because it is the biggest problem of the country.

New budget is around the corner and as FNCCI President, what are your expectations given the new political development?

First of all, budget should come on time and it is critical for all of us. Secondly, we need to look Nepal from larger perspectives. Rather than spending money out for cheap popularity to get vote, we need to look at energy which is a national crisis at the moment. Therefore the budget must focus on improving the existing infrastructure and encourage private sector by giving more incentives to create more investments. Because, at the time of confusion government need to spend on the private sector so that in future they get revenue from the private sector which will sustain the country. Far-west and Mid-west are very critical for this budget. This budget must encourage investments but not the revenue collection which the budget on past did. Because revenue collection has improved in past but not helped develop the nation. Now, it is time for the government to invest in the private sector.

Source: The Kathmandu Post